Medicaid Traditional Rx Cost Savings Can’t Offset Specialty Rx Costs As Much Going Forward

By Clive Riddle, November 13, 2020

Magellan Rx Management just released its fifth annual Medicaid Pharmacy Trend Report, examining Medicaid FFS gross and net drug spend trends, with data derived from Magellan Rx’s pharmacy programs in 25 states and the District of Columbia.

Magellan Rx found the overall FFS Rx claim trend during the past four years changed from 1.9% in 2016, to -4.4% in 2017, 0.8% in 2018 and 4,3% in 2019; certainly a trend in the wrong direction as Medicaid enrollment expands with the pandemic.

During that time, the traditional drug trend has decreased every year (-5.1% in 2016 and -0.4% in 2019), while the specialty drug trend has increased (20.5% in 2016 and 8.6% in 2019.) One could surmise that while specialty trend increases aren’t as eye-popping as half a decade ago, the savings from ratcheting down traditional drug costs have diminished to the point where they can’t offset specialty drug cost increases to the same degree.

Other key findings in this Magellan Rx’s 28-page report include: 

• In 2019, specialty drugs accounted for 48.5 percent of net cost in Medicaid while making up just 1.3 percent of utilization.
• Traditional net spending on drugs decreased 0.4 percent from 2018 to 2019.
• Unit cost, not utilization, drove specialty trend in 2019. The net cost per claim increased by $141.12, while utilization decreased by 0.9 percent.
• While claim volume remains virtually unchanged, the total net spend on specialty drugs increased by 2.4 percent which indicates that specialty drugs will account for 50 percent of total net spend for 2020.
• In 2019, specialty drugs accounted for 48.5 percent of net cost in Medicaid while making up just 1.3 percent of utilization.Traditional net spending on drugs decreased 0.4 percent from 2018 to 2019.Unit cost, not utilization, drove specialty trend in 2019. The net cost per claim increased by $141.12, while utilization decreased by 0.9 percent.While claim volume remains virtually unchanged, the total net spend on specialty drugs increased by 2.4 percent which indicates that specialty drugs will account for 50 percent of total net spend for 2020.